FCA action against rogue debt management companies

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The Financial Conduct Authority (FCA) has today announced action against three rogue fee-charging debt management companies, after they failed to comply with regulatory requirements.The move comes as the FCA found that customers were paying 90 percent of their monthly payment in fees.

Joanna Elson, chief executive of the Money Advice Trust, the charity that runs National Debtline, said:

“The FCA is absolutely right to take such strong action against these firms, after they failed to comply with the requirements imposed upon them.

“It is truly shocking that nine in every ten pounds that people have handed over to these firms has been taken in fees rather than being used to pay down their debts.It simply isn’t right for people who have taken the brave step of tackling their debts to be treated this way.

“This is an extreme example, but one that shows the dangers of turning to profit-driven debt management companies if you are struggling financially.The high fees that these companies charge only serve to add to their customer’s debts, and in many cases we have no confidence they are giving people the right advice.”

“Anyone struggling to cope with debt should instead seek free, independent advice from a charity-run service like National Debtline, Citizens Advice or StepChange Debt Charity.Unlike fee-charging companies, we do not seek to make a profit out of anyone’s situation and will give the best advice based on people’s individual circumstances.”